Why the London Stock Exchange didn’t accept a deal with HKEx
The Hong Kong Stock Exchange recently announced its intention to purchase the London LSE, but the other day the management officially announced that it withdrew the offer. Despite the fact that HKEx offered the British trading floor $39 billion, the deal did not take place. The reason for that is unwillingness of the shareholders and management of the London Stock Exchange to merge.
In early autumn, HKEx received an agreement with rather favorable conditions. Holders of LSE shares were offered by Hong Kong buyers to buy each paper for 20.45 euros and get 2.495 new shares of the Asian exchange. According to the CEO of HKEx, this merger option was optimal for each party, which would create a single system and bring it to the leading positions in the world. But London shareholders considered such conditions unattractive, and representatives of the Hong Kong exchange refused to buy it.
LSE’s management had two days to think about the proposal, but that time was not enough to come to the right HKEx decision. The main reason for the rejection of the deal, the British call the mismatch of vision of the key processes of the trading floor and the value. In addition, the London Stock Exchange expressed concern about the unstable political situation in the Asian country and its consequences.
The controlling interest in HKEx is held by the Hong Kong government. Trading operations with various securities and derivatives are carried out on the stock exchange. In 2012, it acquired the London Metal Exchange – LME, which is one of the largest trading floors in Europe. The amount of the transaction was €1.4 billion.
Features of HKEx and its position on the world market
The Hong Kong Stock Exchange holds the 3rd place in the Asian region and 6th place among the world trading platforms. Its capitalization is $2.8 trillion and it conducts operations with shares of giant banks – HSBC, Bank of China and others.
HKEx is an important player in the market. This is evidenced by the situation in 2015, when it fell only one index, the Hang Seng Index, which led to a sharp fall in quotations DJIA, S & P and MSCI. The processes taking place on the Hong Kong Stock Exchange affect the state of affairs not only in Southeast Asia, but also in South and North America and Europe.
The trading floor was established in 2000, although transactions in this area were concluded back in 1866. Officially, Hong Kong began operations in 1914, when the Exchange Brokers Association was renamed the Stock Exchange.
Despite an interesting history full of mergers and collapses in major indexes, HKEx has maintained its position and gained the trust of many market participants. The exchange uses 8,681 types of financial instruments, and the number of represented shares exceeds 211 billion.